The official "blog of bonanza" for Alfidi Capital. The CEO, Anthony J. Alfidi, publishes periodic commentary on anything and everything related to finance. This blog does NOT give personal financial advice or offer any capital market services. This blog DOES tell the truth about business.

Tuesday, December 31, 2013

There will be little warning in the event hyperinflation begins in the US. There aren't many real-time tracking tools that function well during hyperinflation besides the prices of food and energy in your local neighborhood. I expect the federal government to continue to rely upon the Employment Cost Index (ECI) to track wages and the Consumer Price Index (CPI) to track prices. Economists traditionally regard a wage-price spiral as a hyperinflationary phenomenon.

They compare pretty darn well according to my eyeballs. I'll perform more robust statistical comparisons if they start seriously diverging. I expect the statistical discrepancy between GDP and GDI will describe the nature of any stagflation period during the early onset of hyperinflation. If the discrepancy grows rapidly, it will indicate a rapidly stagflating economy that will tempt policymakers (specifically the Federal Reserve) to increase any hyperinflationary stimulus. Comparing the discrepancy to ECI and CPI will indicate how quickly the hyperinflationary response takes effect. Rapid rises in ECI and CPI will show the wage-price spiral taking effect. This is all Alfidi Capital theory at this point. Time will tell whether my expectations prove correct.

These statistics won't be useful as triggers for investment decision points once hyperinflation really gets roaring. Their monthly and quarterly updates won't be frequent enough for a wage-price spiral that adjusts daily in the real world. They will instead be useful as integrity checks for policymakers. Any attempt to suppress knowledge of deteriorating economic conditions will reduce policymakers' credibility in the eyes of the public.

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Alfidi Capital is a private investment research firm.Alfidi Capital is not affiliated with any broker-dealer and does not manage money for clients.All information mentioned in this blog is derived from public sources.Alfidi Capital makes no representation as to the accuracy or completeness of this information.Alfidi Capital and its owner, Anthony J. Alfidi, may from time to time hold long or short positions (including options, warrants, rights, and other derivatives) in the securities mentioned in this blog.This blog is provided for informational, educational, and entertainment purposes only and does not constitute a recommendation or solicitation to execute a transaction in any investment product.Investors should consult with a properly licensed and registered investment professional before making any investment decision.The bottom line:Enjoy reading this blog, but the risk you take with investing is entirely your own.